Occupational Pension Schemes (Funding and Investment Strategy and Amendment) Regulations 2024

Viscount Younger of Leckie Excerpts

Tuesday 26th March 2024 Grand Committee

Moved by

[Viscount Younger of Leckie]

That the Grand Committee do consider the Occupational Pension Schemes (Funding and Investment Strategy and Amendment) Regulations 2024.

Relevant document: 17th Report from the Secondary Legislation Scrutiny Committee

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Viscount Younger of Leckie) (Con)]

My Lords, these regulations were relaid before the House on 26 February. They bring in new measures that will support trustees and sponsoring employers of defined benefit occupational pension schemes to plan and manage their scheme’s funding over the longer term. The aim of the regulations is to achieve a fair and long-lasting balance between providing security for members of defined benefit schemes and affordability for the sponsoring employer.

I start by giving a bit of background. The UK has the third-largest pension system in the world, with assets of around £2 trillion held in both defined contribution and defined benefit schemes. The pensions sector is an integral part of the UK economy. I will focus on defined benefit pensions and these regulations. Over the last decade, across the Organization for Economic Cooperation and Development, the UK has seen the greatest improvement in defined benefit funding.

There are around 5,000 defined benefit schemes in the UK, and around 9 million people who depend on these pensions when they retire. Defined benefit pension schemes, often referred to as DB schemes, are a promise that scheme members will receive a guaranteed income in retirement, usually paid monthly, for the rest of the member’s life. Between them, UK DB schemes have around £1.4 trillion of assets under management.

Most DB schemes are closed either to new members or to new accruals. This means that they have an increasing number of members who are retired or close to retirement, and either a decreasing number of members or no members at all who will make contributions to the scheme. This is referred to as “maturing” and will change the funding requirements of the scheme. It is therefore extremely important that employers and trustees work together to manage maturing schemes to ensure they can continue to pay members’ pensions.

DB funding levels have improved in recent years through a combination of employers supporting schemes and, more recently, changes to interest rates. The Work and Pensions Committee report on its DB schemes inquiry, published today, recognises the new opportunities and challenges this brings. But financial markets and economic conditions are changeable and funding positions can quickly deteriorate. The Government will respond to the Work and Pensions Committee report in due course, but I reassure noble Lords that these regulations are designed to provide a solid foundation across current and future economic and market environments. This is good news for schemes, members and sponsoring employers, and for the UK economy.

The majority of DB schemes are well managed and supported by their sponsoring employers, but some schemes are not as well run, or are taking an inappropriate level of risk in their approach to investment and funding. This can lead to funding problems developing. Over a quarter of all DB schemes are in deficit on a technical provisions basis. This means that they have a deficit which will need to be repaired to ensure that members get their promised pensions when they are due to be paid—hence the regulations we are debating today.

The regulations build on the current funding regime for DB schemes, embed good practice and provide clearer funding standards. This will help ensure that all DB members have the best possible prospect of getting the benefits they have worked so hard to build paid in full when they fall due.

The consultation attached to these regulations built on extensive discussion, engagement and consultation with the pensions industry going back as far as 2017. This joined-up working is ongoing, with the development of the Pensions Regulator’s draft code of practice through to its most recent consultation on the statement of strategy. We had good engagement with the consultation: 92 responses from a wide variety of organisations across the pensions industry. The industry broadly welcomed the draft regulations but expressed some concerns that they were too prescriptive and could be improved for schemes open to new accrual. We listened, and the regulations before us today take account of that.

A key aspect of this work was the importance of balancing, on the one hand, clear standards for both open and maturing schemes that reflect the best practices that most schemes already follow and, on the other, ensuring that individual schemes have the flexibility to make funding decisions that best suit their own unique circumstances. Also, schemes must continue to be affordable for their sponsoring employers and to pay out all pensions as they fall due. Importantly, we aim to promote better collaboration between sponsors and trustees in the formulation of an overall journey plan. This includes an investment approach that reflects the scheme’s circumstances.

The Pension Schemes Act 2021 introduced new scheme funding requirements for DB schemes and requires DB scheme trustees to prepare a statement setting out the scheme’s funding and investment strategy, which must be submitted to the Pensions Regulator. These regulations are principle-based and set out detailed requirements for the funding and investment strategy. Better information and clearer funding standards will help address the problems the Pensions Regulator has faced in the past and will enable it to be more effective, efficient and proactive in carrying out its statutory functions.

As part of this strategy, all DB schemes will be required to set out their plans for how pension benefits will be paid over the long term. For example, this could be through buyout with an insurer, by entering a superfund or by running on with continued employer support. The strength of this employer support is fundamental. For the first time, these regulations introduce key principles for assessing the strength of the employer covenant. This is an assessment of the financial ability of the employer in relation to its legal requirements to support the scheme.

Schemes are required to have a clear plan along their glide path to maturity and low dependency, so as not to need further employer support by the time they are significantly mature. Schemes are required to reach low employer dependency in reasonably foreseeable circumstances. This embeds existing good practice that funding risks taken by a scheme before they reach maturity must be supportable by the employer, while providing explicitly for open schemes to support more risk, because there is more time for them to address any funding shortfalls.

The best possible protection for a DB member is to be supported by a strong and profitable employer. That is why we have made it clear that recovery plans are to be put in place as soon as the employer can reasonably afford, but this does not mean that the employer must put every free penny into the scheme to the detriment of its growth and other commitments. We believe that this sets an appropriate and sustainable balance while ensuring that schemes get a fair share of available resources.

The funding and investment strategy must be reviewed and, if necessary, revised, alongside each scheme valuation, which is usually every three years. When submitted to the Pensions Regulator, these valuations will be accompanied by a statement of strategy. This will articulate the trustees’ approach to long-term planning and management, as well as their assessment of the implementation of the funding strategy, key risks and mitigations and any lessons learned. Depending on circumstances, the Pensions Regulator now has the flexibility to ask for less detailed information from the schemes to improve long-term planning and avoid unnecessary burdens.

These regulations help drive the Government’s vision to encourage schemes to invest in ways that are productive for the UK economy. They make it clear that schemes have significant flexibility to choose investments while meeting the low-dependency principle. This will help support trustees in reacting to changing circumstances while investing in the best interests of their members.

The pensions industry has welcomed these revised regulations, which are explicitly more accommodating of risk taking, where supported by the employer covenant. They increase the scope for scheme-specific flexibility, including allowing open schemes to take account of new entrants and future accrual when determining when the scheme will reach significant maturity. The Pensions and Lifetime Savings Association recently commented that this is

“a significant set of ‘win’”

for its members.

I move on to the timing of these regulations. They will come into force on 6 April 2024 and a scheme must have a funding and investment strategy within 15 months of the effective date of the first actuarial valuation obtained on or after 22 September 2024. We intend that the Pensions Regulator’s funding code will be laid before Parliament this summer. The regulations, the code and guidance will work in partnership. These regulations will encourage the widespread adoption of existing good practice and help the regulator to intervene more effectively to protect members’ benefits.

I am confident that the Occupational Pension Schemes (Funding and Investment Strategy and Amendment) Regulations 2024 will support schemes and employers to make long-term plans and enable the Pensions Regulator to take effective action when needed. This will help ensure that scheme members get the retirement they have contributed towards and rightly expect. In my view, the provisions in these regulations are compatible with the European Convention on Human Rights. I commend the regulations to the Committee and beg to move.

[Lord Palmer of Childs Hill (LD)]

My Lords, I thank the noble Viscount very much for his normal exposition. I am sure that we will hear a lot more detail from other participants. I will confine myself to some questions rather than go through this large document, which the noble Viscount did not go through in great detail.

First, is there a disproportionate governance burden for small firms? I was worried about how small firms will be able to cope with these new regulations. Secondly, the resolutions will add to the duties of defined benefit schemes. Can the noble Viscount elaborate on how these duties will be dealt with? Thirdly, will the regulations help set out long-term objectives? I was a bit worried about comments that these schemes are all coming to an end and that we are just relying on people sitting in place on the schemes and very few new people, if any, coming in.

Is there a conflict—I could not answer this myself—between the beneficiaries and the employers? The noble Viscount used the phrase “fair balance”. I am not sure that this conflict shows a fair balance. On the duty of trustees to protect the interests of the beneficiaries, can we rely on all these trustees to do so, especially when the schemes are, in effect, stationary and being wound up? Also, there is the impact of the fund being hived off to insurance companies. These funds are hived off so often; will the beneficiaries’ interests really be protected? I think that will be their worry.

Finally, the noble Viscount talked about actuarial valuations. So often they mean that funds keep moneys in reserve, probably more than a commercial firm would have to. Can he comment on that? It is very nice and careful that they do so, but sometimes that might have a negative impact on the beneficiaries. I hope he can give me some answers to those numerous questions.

--- Later in debate ---

[Baroness Sherlock (Lab)]

My Lords, I thank the Minister for his introduction to these regulations and all noble Lords who have spoken for their contributions. I should perhaps say that nothing in my speeches should ever be taken as actuarial advice or indeed advice of any kind, unless you have money to burn. As we have heard, these regulations implement significant changes to the DB scheme-specific funding requirements in association with the revised DB funding code. I will go through what I understand them to be doing—I invite the Minister to correct me if I have it wrong—and I have some questions.

The changes are driven by the recognition that most DB schemes are closed to future accruals and are maturing, which makes the longer-term strategic management of them important if members are to make sure they get their benefits in full when they fall due. The key principles underpinning the changes are a requirement for schemes to be in a state of low dependency on their sponsoring employer by the time they significantly mature, and better trustee engagement and better understanding and accountability between trustees and the regulator.

The regulations require trustees to agree a funding and investment strategy—an FIS—with the sponsoring employer, which will set out that longer-term funding objective and how it will be achieved over the lifespan of the scheme. Schedule 1 then sets out the matters and principles that trustees must have regard to in setting their FIS, and that they have to think about liquidity and unexpected requirements on the journey and after significant maturity, including the strength of the employer covenant, which I will come back to in a moment.

The trustees have to consult the employer on a statement of strategy on progress in achieving their FIS. In the absence of a Keeling schedule—I confess I am slightly obsessed with them—I went back to the Pensions Act 2004. Section 221B states that

“trustees or managers must, as soon as reasonably practicable after determining or revising the scheme’s funding and investment strategy, prepare a written statement of … the scheme’s funding and investment strategy, and … the supplementary matters set out in subsection (2)”.

Paragraphs (a) to (c) of Section 221B(2) say that the supplementary matters are: the extent to which trustees or managers think the funding and investment strategy is being successfully implemented, and if not, what they will do about it; the main risks faced by the scheme in implementing the funding investment strategy and what they are doing about the risks; and their reflections on past decisions and lessons learned. Paragraph (d) adds:

“such other matters as may be prescribed”.

These matters are now prescribed because they are defined by Schedule 2 to these regulations, which specifies the information to be covered in the strategy statement.

I assume this means that TPR will now have discretion on the level of detail it can request from a scheme in relation to the supplementary matters. Otherwise, without that discretion, it would have to rely on its existing powers and the setting of the clearer funding standards in these regulations. Is that a correct assumption? How will the DWP monitor whether the regulator is delivering that higher level of probability for which it is shooting? Are the Government leaving the door open to the prospect of increasing the regulator’s powers? That is an interesting one.

To return to the covenant, Regulation 7 puts the employer covenant assessment on a formal legal footing for the first time. The covenant now appears to be central to the new regulatory framework, rather than being left for the regulator to cover in the code. I presume the intention is for this to be an area of increased focus for trustees. This is welcome, given the increasing importance of covenant strength to the decisions made by trustees, although I suspect the law is catching up with trustee thinking as much as driving it.

However, getting access to enough information to assess the employer covenant is not always easy, and trustees and employers may not always align in their view of the strength of the covenant. The Minister mentioned that change can come quickly. We live in a world where changing markets and the impact of technology, mergers and acquisitions, leveraging and new creditors can all make a material difference to the strength of the covenant in pretty short order. The same forces can also reduce trustee confidence in the strength of the covenant in the longer term.

Regulation 7 requires trustees to assess the strength of the employer covenant, looking at current and future developments and the resilience of the business when they are setting or revising the FIS. As the Minister mentioned, funding deficits must be addressed

“as soon as the employer can reasonably afford”.

But we are also told that the impact on the sustainable growth of the business must be taken into account. Does that not put the trustee in the position of being faced with a push-me pull-you set of regulatory requirements, where the two are pulling in different directions?

Trustees will be required to seek more detailed information from the employer regarding its business. The regulator will provide updated guidance on the covenant, which will set out its expectations of both employers and trustees, and the regulations will clearly require trustees and employers to work more collaboratively in future. I have two questions about this, following the issue flagged up by my noble friend Lady Drake. Because placing the assessment of an employer covenant on a legal basis is novel, we need the Minister to make it clear how the regulator will resolve disagreements between trustees and employers on the current and future strength of the covenant, where that is inhibiting agreement on the FIS. If they cannot agree on the FIS because of different views on the strength of that, what will the regulator do about it? Secondly, will the regulator be able to impose its own view of the covenant on trustees?

Regulation 16 strengthens the requirements on the chair in respect of the strategy statement. It seems that the code has been drafted in a manner which assumes that chairs of trustees are appointed by the trustee board. I believe that there are still occupational schemes where the appointment of the chair is wholly the decision of the employer. Does this carry any implications for the requirements placed on chairs appointed in that way?

The costs incurred by trustees, which are funded by employers, will inevitably increase as a result of this. I am quite sure that the Minister will have read the 13th report of the Secondary Legislation Scrutiny Committee. I will not read it out in detail, but it points out the DWP’s assessment that about 16% of DB schemes had deficits in March 2023. It says:

“The Impact Assessment … claims that, as a result of these Regulations, DB schemes’ aggregate ‘deficit reduction contributions’ could be around £0.26 billion lower over the 10-year period compared to the current situation”.


It goes on to point out a range of issues around this, but what interests me is this:

“We note … that the IA states that it is based on data from March 2021, ‘therefore more recent market developments (particularly the rise in interest rates and gilt yields which impacted the estimated liabilities) are not captured in the modelling.’ In the light of market volatility, the House may wish to explore how robust DWP’s assumptions are about the potential benefits of these Regulations”.


I do not have a dog in this fight, but could the Minister put a response to that on the record? What assurances can he give the Committee in response to the concerns of the Secondary Legislation Scrutiny Committee?

Another point was made by that committee in its 17th report. I think the Minister indicated—or maybe he did not; I cannot remember—that this is a revised version of an instrument originally laid on 29 January. The DWP had to amend the content to amend the commencement date of one of the provisions to ensure that it aligned with the policy intention. Yet again, for the record I note a disappointment that once again we are having another instrument laid because of errors made in the original that needed to be corrected. It is becoming a bit of a pattern, I am afraid. But in this case, it provides us with an opportunity. In its 17th report, the SLSC said at paragraph 7:

“Our 13th Report of this session provided the House with extensive supplementary information on how the obligation is intended to work, and we are disappointed that DWP did not take this opportunity to improve its Explanatory Memorandum”.


Can the Minister explain to the Committee why the Government did not take that opportunity afforded to them by the need to reissue the instrument?

I have two quick points to make that were raised by other Members. First, on the Work and Pensions Select Committee report, the Minister said that the Government would respond to that in due course. I recognise that it has only just come out and they will not be able to. However, there is one point that would be helpful in particular—they will already have thought about this—which is that the committee raised the position of open schemes and relayed concerns that, despite some of the changes that had been made, some open schemes still thought that the new regime could require them to de-risk prematurely. Are the Government confident that they have landed in the right space on this?

Secondly, my noble friend Lady Drake asked a very important question about the regime governing investment by schemes that have reached significant maturity, essentially about whether they will no longer be required to balance cash from investments and liabilities going out. It would be very helpful if we could know about both of those.

I apologise to the Minister that I have, yet again, asked a number of questions, but I am grateful and look forward to his reply.

[Viscount Younger of Leckie (Con)]

My Lords, I thank all those who have spoken in this short debate. As usual, there were a number of specific and quite technical questions, notably from the noble Baroness, Lady Sherlock. I shall do my best to answer them. I think that some of them may be included in some of my rounding-up answers to other questions—but, as she will expect me to, I shall write a letter copying in all Peers if I fail to answer all of them.

Just on the question that the noble Baroness raised about the draft regulations, we outlined in the consultation response, as she alluded to, on 26 January 2024, that we would legislate for the regulations to come into force from April 2024, applying to scheme valuations from September 2024. That recognised feedback through the consultation about the need to give the pensions industry sufficient time to prepare before the requirements took effect. The regulations as drafted meant that one component of the reforms, the recovery plans, would come into effect on 6 April 2024 and not 22 September 2024. Since laying the regulations, we have recognised that this has the potential to cause confusion and additional administrative requirements for schemes. That is why we withdrew the regulations and relaid a revised version.

For clarity, we made two changes to the regulations. The first amendment was to ensure that the changes to recovery plans took effect only when the effective date of the actuarial valuation to which the recovery plan relates is on or after 22 September 2024. The second, in light of the first, is to clarify that changes which relate to actuarial valuations and reports also apply only on or after 22 September 2024. I reassure the noble Baroness that no other changes were made. These changes restate our intention to give sponsoring employers, scheme trustees and managers the same amount of time to prepare for the new requirements in the recovery plan.

I do not believe that I have an answer to the Explanatory Memorandum question, but I shall see whether I can address that before my remarks have concluded.

--- Later in debate ---

[Viscount Younger of Leckie (Con)]

Yes, I will do my best to do so. Regarding the Explanatory Memorandum, as outlined, because the changes here were focused on clarifying the date on which the regulations came into effect, the changes to the Explanatory Memorandum were limited to reflect the change. We shall note the feedback for future SIs. That is my answer but let me reflect on it; I might well be able to enhance it in the letter that I am clearly going to have to write.

[Baroness Sherlock (Lab)]

I will not interrupt further but, just to clarify the question, the point the committee was making was not that the Explanatory Memorandum needed to be changed to reflect the changes in the instrument itself. It was that, since the department was having to relay the whole thing, why not take the opportunity to do a better job of the EM? That is all.

[Viscount Younger of Leckie (Con)]

Absolutely. I think I have already indicated that lessons have been learned. From my point of view, I regret that we fell down on the Explanatory Memorandum and that we had to relay the regulations. Just for the record, I wanted to say that.

With that, I hope that we can take these regulations forward.

Motion agreed.

Women’s State Pension Age

Viscount Younger of Leckie Excerpts

Tuesday 26th March 2024 Lords Chamber

[Lord Palmer of Childs Hill (LD)]

My Lords, I thank the Minister for bringing the Oral Statement to the House. However, to paraphrase “Hamlet”, methinks the noble Viscount doth protest too much. It is all protest as to why he is not doing things.

From these Benches, we support the WASPI women in their campaigns, and we welcome that, after their years of work, the ombudsman has finally recommended compensation. They must be recognised as courageous women, and their persistence should be rewarded. Sadly, as the noble Baroness, Lady Sherlock, said, some have died along the way.

The noble Lord, Lord Hague, wrote a big op-ed in the Times today about why the WASPI women were not going to be paid. Basically, what he said can be summed up as “They should have known better”. At this late hour, I can think only to quote from The Hitchhiker’s Guide to the Galaxy:

“All the planning … and demolition orders have been on display at your local planning department in Alpha Centauri for 50 of your Earth years, so you’ve had plenty of time to lodge any formal complaint”.


I am afraid that what has happened is that so much time has elapsed that so many of the WASPI women have died or retired, and life has gone on.

The DWP has said, so I have read, that it will comply with the ombudsman’s decision. I would like the Minister to say how many WASPI women have died—a simple calculation, rather than the additional details that the noble Baroness, Lady Sherlock, asked for. Please will he come back to the House and say that the DWP has agreed, after consideration, that it will comply with that ruling, as the ombudsman suggested?

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Viscount Younger of Leckie) (Con)]

I thank the noble Baroness, Lady Sherlock, and the noble Lord, Lord Palmer, for their comments. Some of what I will say chimes with the comments made by the noble Baroness. The Government are fully committed to supporting pensioners in a sustainable way that gives them a dignified retirement, while also being fair to them and taxpayers. We will carefully study the ombudsman’s recommendations in that respect.

I too am grateful to the ombudsman for conducting the investigation. The Government will provide an update to the House once we have considered the report’s findings; I will say a little more about the timings in a moment. Following the ombudsman’s five-year investigation —we should note that it has been five years—and his subsequent substantial report, it is right that we carefully consider his findings in full. That is work that this Government and the department are steadfastly committed to. I also make the point that the department has assisted the ombudsman throughout his investigation—which he recognises—by providing thousands of pages of evidence and detailed comments on his provisional views. As I said previously, the ombudsman’s chief executive herself has recognised that.

Something else that chimes with some of the remarks from the noble Baroness is that I well understand the strong feelings across the Chamber on these matters and the desire for urgency in addressing them. To echo points that have been made in the other place: these are complex matters, and they require careful consideration. It is therefore right that we take time to consider the ombudsman’s full findings.

There are many issues to consider, including that the courts concluded that the DWP gave adequate and reasonable notification of the state pension age changes. The ombudsman has noted in his report the challenges and complexity in laying the report before Parliament, through which he has brought matters to the attention of this House. We will provide a further update to the House, as I said earlier; but I also echo points made in the other place that it will be done with “no undue delay”.

The ombudsman is not saying that WASPI women suffered a direct financial loss, nor that all women in born in the 1950s will have been adversely affected. That adds to the complexity of the situation, which, again, is why the report requires proper and due consideration.

I turn to the points that were made. The noble Baroness, Lady Sherlock, asked about remitting to Parliament. In saying that we continue to take the work of the ombudsman very seriously, it is only right that we consider the findings of what is a substantial document. In laying the report before Parliament, the ombudsman has brought matters to the attention of the House, so it is important that it is considered very carefully.

The noble Baroness, Lady Sherlock, raised some points about the 2011 Act. The Pensions Act 2011 accelerated the equalisation of women’s state pension age by 18 months and brought forward the increase in men’s and women’s state pension age to 66 by five and a half years relative to previous timetables. The changes in the 2011 Act occurred following a public call for evidence and extensive debates in Parliament. During the passage of the Act, Parliament legislated for a concession worth £1.1 billion, which reduced the proposed increase in state pension age for over 450,000 men and women. That means that no woman will see her pension age change by more than 18 months relative to the timetable set by the 1995 Act. These reforms have focused on maintaining the right balance between the affordability and sustainability of the state pension and fairness between generations.

On the figures that were raised, I think, by the noble Lord, Lord Palmer, I will cite a few statistics that may be helpful to the House. Around 3.5 million women born in the 1950s are impacted by the state pension age, and around 2.2 million men born between 6 December 1953 and April 1960 inclusive are also impacted. At the start of 2024, there will be around 790,000 women born in the 1950s who are still to reach their state pension age of 66. On the number of women who have died, which was also mentioned, the department offers its very sincere condolences to the families of the 1950s-born women who have died before reaching state pension age.

A question was raised about the referral to Parliament and not to the DWP, as well as the question of trust. In reply, I quote what the ombudsman’s chief executive herself said on Sky News last Thursday, the day the report was published:

“The Government, the DWP, completely co-operated with our report, with our investigation, and over the period of time we have been working they have provided us with the evidence that we asked for”.


I respect the independence of the ombudsman’s office and note that he has referred this matter to Parliament. His report notes the complexity and challenges involved. In laying the report before Parliament, the ombudsman has brought matters to the attention of this House. As I have said before, we will provide a further update to the House.

The noble Baroness, Lady Sherlock, asked about considering giving 15 years’ notice. She is right that it is important to give people enough notice about state pension age changes. In the last review of state pension age, the Government committed to provide 10 years. That is intended to provide sufficient time to allow people to plan.

I will finish by stating that this Government have a very strong record in supporting all pensioners; for example, in 2023-24 we will spend £151 billion on support for pensioners, which represents 5.5% of GDP. That includes around £124 billion for the state pension. We are committed to ensuring that the state pension remains the foundation of income in retirement—now and for future generations. Just to make the point, we are honouring the triple lock, which was mentioned on Sunday by the Chancellor, and is being put into the Conservative Party manifesto. Also, we are increasing the basic and new state pensions by 8.5% from next month. I mentioned earlier in the Chamber that we now have 200,000 fewer pensioners in absolute poverty after housing costs than in 2010. I thank both Peers for their comments.

[Lord Davies of Brixton (Lab)]

The House should thank the Minister for bringing us the Oral Statement and answering the questions. We should, however, be under no illusion that this is only a minor element of the issues raised by the 1950s women arising from the increase in their retirement age. This stage is not about any form of restitution of the pension they have lost, it is simply about a failure on the part of the DWP to provide the people affected with adequate information. What is clear from the ombudsman’s report is that the DWP failed to adequately inform those concerned. That is what the report finds. It also finds that it constituted maladministration. Those points, those issues, were identified in the stage 1 report. So that part is not a surprise. The Government have known that for some time.

This stage identifies that that maladministration amounted to an injustice, and it suggests that those who were affected by that injustice are entitled to a remedy. The Secretary of State said in the Commons yesterday—he said it 26 times, by my count—that there would be “no undue delay”. Well, “undue delay” implies to me that there will be a delay. The Secretary of State argued—it has been repeated by the noble Viscount today—that the reason for this delay is the complexity of the issues.

I am afraid I do not have much sympathy at all for this issue of complexity. The issues are clear and straightforward: a group of women were told later than they should have been about the change in their retirement age and, because of that, they suffered detriment—a loss of autonomy and a loss of life chances. That is the injustice. That is all clear. It does not need any further assessment or thought. It absolutely leaps off the page in the ombudsman’s report.

My question for the Minister is: whatever the need for delay to work up the fine details of any deal, will he not accept that it is now time to acknowledge there was maladministration, as identified some time ago by the ombudsman? Will he recognise the injustice that is set out in this report? Will the Government commit to implementing some remedy in the light of the maladministration and the injustice?

[Viscount Younger of Leckie (Con)]

As I made clear earlier, the report came out only on Thursday. We have said very clearly that we want to have enough time to be able to look carefully at all the details in the report. This touches on some of the points that the noble Lord has made.

Could I just say that the story the noble Lord has presented is not entirely the actual story? For example, it is important to remember the state pension age changes were considered by the courts during the ombudsman’s investigation. In 2019 and 2020, the High Court and the Court of Appeal respectively found no fault with the actions of the DWP. The courts made it clear that under successive Governments, dating back to 1995—and I make the point about successive Governments—the action taken was entirely lawful and did not discriminate on any grounds. During these proceedings, the Court of Appeal held that the High Court was entitled to conclude, as a fact, that there had been

“adequate and reasonable notification given by the publicity campaigns implemented by the Department over a number of years”.

Just to add to that, to be helpful to the noble Lord, since 1995 the Government have used various methods to communicate the state pension age changes, including leaflets explaining the legislative changes, advertising campaigns to raise awareness and directly writing to those affected. So I would just make the point that that is one of the complexities and that it is not all as the noble Lord says. As I have made clear before, this is one of many complex issues that we need to look at as a result of the production of this report.

[Lord Dodds of Duncairn (DUP)]

I thank the Minister for the Statement. On the general issue of the state pension, I warmly welcome the commitment by the Government, through the Chancellor of the Exchequer at the weekend, to the maintenance of the triple lock. It is extremely important that that assurance is given. I remember when we negotiated the confidence and supply agreement with the then Conservative Government, this was one of our central demands and the Government committed to that. I am glad that it remains in place.

On this issue of the WASPI campaign, I congratulate the women and those behind it, who—over many, many years—have brought it to this point. I understand the complexities, I understand it was produced only on Thursday and I understand the need for a considered look at it. Both the Opposition and the Government take that position. But I do worry, along with others, about this continued repetition of “undue delay”. It has been five years, as the Minister indicated, since this was first referred to the ombudsman and many more years that this has been under consideration. Can the Minister give your Lordships’ House some kind of indication of when this is going to come back to Parliament? We know the timescale for the remainder of this Parliament. It might not be that long. We need action as quickly as possible. The women concerned deserve that. The action has to be one that entails a clear commitment to proper compensation.

[Viscount Younger of Leckie (Con)]

I thank the noble Lord, Lord Dodds, for his support and endorsement of our stance on the triple lock and our decision to include it in our manifesto. On the points on WASPI that he has mentioned, absolutely—I think I have said this before—I recognise the strength of feeling and I am aware of the urgency in dealing with many of these matters. I probably will not repeat it again, but just to say it briefly, I have highlighted very clearly the complexity of the issues. The noble Lord would not expect me to be in a position to set out a timetable, even if I could. So I am afraid that I will disappoint him by sticking to the line, which is that we will be coming back to Parliament without undue delay.

[Lord Sikka (Lab)]

My Lords, I congratulate the WASPI and Back to 60 campaigners on their quest for justice. The ombudsman’s reports have said that:

“Our investigation found maladministration … thousands of women may have been affected by DWP’s failure to adequately inform them that the state pension age had changed”.


This has led to anguish, hardship and many other problems. I have met many of these women and listened to their arguments and to their case. This problem of not telling them about the hike in pension age is part of a bigger problem about how women have been treated by successive Governments. Despite the Equal Pay Act 1970 and the illusions of equality, women continue to be treated as second-class citizens. The gender pay gap persists, which then leads to the gender pension gap. Despite hiking the state pension age for women, women continue to receive a lower state pension. No attempt whatever has been made to equalise the two, although the equality horse was ridden to raise their state pension age. Unfortunately, many of the wronged women have died. I am sure that the House would agree that justice delayed was justice denied.

I do not understand what, in the light of this report, the Government need to consider. It is very clear that women have been wronged. I press the Minister to give a commitment that women will be compensated for the anguish and hardship that they have suffered and that this compensation will be paid, I hope after the Easter break.

[Viscount Younger of Leckie (Con)]

I will disappoint the noble Lord by saying that I am not able to give any such commitment, apart from those that I have given. I am beginning to sound like a long-playing record but, despite what he said, these are complex matters, and he will have to respect that. I want to pick up on one thing that he mentioned—the role of DWP. Yes, the report’s words, not mine, were that the PHSO found maladministration in the steps that the department took between 2005 and 2007 in relation to notifying the women affected. I gently point out that this was when the Labour Party was in power. The point has been made before, but it is worth making. However, this is one of the many complexities. I am unable to answer the precise questions. I hope that the noble Lord respects this.

Child Poverty

Viscount Younger of Leckie Excerpts

Tuesday 26th March 2024 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Viscount Younger of Leckie) (Con)]

My Lords, these statistics cover 2022-23—a year when war in Ukraine and global supply chain challenges led to unexpected and high inflation rates, averaging 10% over the year. These factors are reflected in the statistics. The Government have since taken firm action to support those on the lowest incomes, including through uprating benefits by 10.1% from April 2023, increasing the national living wage from April 2023 and providing cost of living support worth £96 billion over 2022-23 and 2023-24.

[Baroness Lister of Burtersett (Lab)]

My Lords, we have a record number of children in poverty, of whom two-thirds are considered to be in deep poverty, and an annual increase even on the Government’s preferred measure. Plus more food insecurity means more hungry children and reliance on food banks. So what was the Secretary of State’s response? “The plan is working”—working for whom? When seven in 10 children in poverty have at least one employed parent, parental employment can be only a partial answer. Welcome as it is, benefits uprating is really the minimum we should be expecting. Will the Government therefore now accept that it is high time for a new plan, which scraps the social security policies that drive worsening child poverty and sets out a comprehensive, cross-government child poverty strategy?

[Viscount Younger of Leckie (Con)]

Setting such a strategy and targets can drive action that focuses primarily on moving the incomes for those just in poverty—just above a somewhat arbitrary poverty line—while doing nothing to help those on the very lowest incomes or to improve children’s future prospects. Therefore, we have no plans to reintroduce an approach to tackling child poverty focused primarily on income-based targets. Having said that, perhaps I can reassure the noble Baroness that my Department for Work and Pensions consistently works across government to support the most vulnerable households.

[Lord Laming (CB)]

My Lords, does the Minister agree that this figure from the department graphically indicates the importance of the school meal service? Would it be better to go back to a position in which the head teacher, rather than some large external body that is unknown to the school, is responsible for the quality and delivery of the service?

[Viscount Younger of Leckie (Con)]

I note that the noble Lord has raised this point in the House in the past, and the Government certainly support the provision of nutritious food in schools. It ensures that pupils develop healthy eating habits and can contribute to concentrating and learning in the classroom. As he will know, we have extended free school meal eligibility several times and to more groups of children than any other Government over the past half a century. We provide free meals for 2 million disadvantaged pupils through the benefits-related criteria.

[Baroness Hughes of Stretford (Lab)]

My Lords, the Minister was quite selective in the figures he gave in his Answer because, in fact, by every official measure, child poverty has been rising faster in the UK than in most OECD and EU countries, many of which have actually reduced child poverty during this period. It is the fastest rise we have seen for almost 30 years, and this is not an accident; it is the direct consequence of the Government’s political decisions, taking money away from the poorest families to benefit the better off. Does the Minister not agree that it is now imperative that the Government bring forward the sort of comprehensive plan to which my noble friend referred, to start to restore the incomes of these families and children and take them out of poverty?

[Viscount Younger of Leckie (Con)]

I beg to differ with the noble Baroness, because analysis shows that the Government’s cost of living support prevented 1.3 million people falling into absolute poverty after housing costs in 2022-23. That includes 300,000 children, 600,000 working-age adults and 400,000 pensioners. The £96 billion I alluded to earlier included £20 billion for two rounds of cost of living payments for more than 8 million households on eligible means-tested benefits. I gently say to the noble Baroness that she should bear these very important initiatives in mind.

[Baroness Boycott (CB)]

My Lords, I draw the House’s attention to the 200,000 children who represent 14% of the children who are eligible for free school meals, even on the very small amount of money their parents are allowed to use, who are not registered. They are not registered because there is no automatic registration, which can happen extremely easily once people are handed out universal credit. I have asked the Government this many times: why does automatic registration not happen? This is 200,000 kids today, right now, who did not get a meal that we pay for.

[Viscount Younger of Leckie (Con)]

I have certainly taken note of the point raised by the noble Baroness, but I say again that we have extended eligibility several times and to more groups of children than any other Government over the past half a century. Free meal support is also available to around 90,000 disadvantaged students in further education, so an awful lot has been happening in that space.

[Baroness Burt of Solihull (LD)]

My Lords, the fact that nearly one in three children in the UK are living in relative poverty is the logical outcome of years of starving social services and funding for the most vulnerable in our country. At worst, that translates into empty tummies, cold homes and even no bed to yourself. I am sure the House would be interested to hear the Minister’s excuse—surely not Ukraine again. In an election year, I have to tell him that the British people will neither forget nor forgive what this Government have done to our children.

[Viscount Younger of Leckie (Con)]

I think that is a little unfair from the noble Baroness. She will recognise, as I think the House does, that Ukraine has played a part. In the previous Question we heard about our role as a country, which is continuing, and we have had support from the Opposition on that. We have set a clear and sustainable approach, based on evidence of the important role that parental employment plays in reducing the risk of child poverty. We have a huge number of initiatives in my department to encourage more people to get into work. That is why, with more than 900,000 vacancies across the UK, our focus is firmly on supporting parents into and to progress in work, which helps directly with poverty.

[Baroness Sherlock (Lab)]

My Lords, the Minister challenged my noble friend and cited statistics on absolute poverty, which, as we know, is the Government’s favourite measure. The last time we discussed this, on 28 February, the Minister told me that the Government prefer absolute poverty rather than relative poverty as a measure. He said:

“The absolute poverty line is fixed in real terms, so it will only ever worsen if people are getting poorer and will only ever improve if people are getting richer”.—[Official Report, 28/2/24; col. 1028.]


Since the latest official statistics show that 600,000 more people, half of them kids, are living in absolute poverty, does the Minister accept that the Government’s policies are now pushing children into poverty? If so, what are they going to do about it?

[Viscount Younger of Leckie (Con)]

I have already spelled out what we are doing about it. Do not forget that these figures are one year out; they are retrospective figures. In my opening Answer, I spelled out what we had taken action on. The noble Baroness is right; we do prefer absolute poverty, because relative poverty can also provide counterintuitive results, as it is likely to fall during recessions due to falling median incomes. Under this measure, poverty can decrease even if people are getting poorer.

[Baroness Meacher (CB)]

My Lords, I wonder whether the percentage of children in absolute poverty in this country is higher or lower than in France or Germany. I wonder whether this Government have some lessons to learn from our neighbours.

[Viscount Younger of Leckie (Con)]

Indeed. I do not have any figures to answer the noble Baroness’s question, but she makes an important point, which other Peers have raised, about the importance of bringing as many children out of poverty as possible. I happen to cover the Child Maintenance Service in government, and I feel very proud that every year we take 160,000 children out of poverty by ensuring that the money flows from the paying parent to the receiving parent—it is very important.

[Baroness O'Grady of Upper Holloway (Lab)]

My Lords, is the Minister aware of TUC-commissioned research from November 2022 that showed that more than a quarter of children whose parents had paid jobs in social care are growing up in poverty? That is a scandal—220,000 children of parents who do work that I am sure noble Lords will agree is vital, skilled and valuable work for this country. Can the Minister tell me whether the picture in respect of the children of workers in social care has got better or worse since 2022? If it is worse, what are the Government going to do about it?

--- Later in debate ---

[Viscount Younger of Leckie (Con)]

I have already mentioned many of the things that we are doing. I have also been quite open by saying that the war in Ukraine and the pandemic have had an effect. Those are not the only factors, but it is important to recognise that. To support people in work, the voluntary in-work progression offer is now available in all jobcentres across Great Britain, providing an estimated 1.6 million low-paid workers on universal credit access to personalised work coach support to help them increase their earnings. The department is working at pace with a number of important initiatives to encourage more people into work, which takes more children out of poverty.

Household Support Fund: Children’s Bed Poverty

Viscount Younger of Leckie Excerpts

Thursday 21st March 2024 Lords Chamber

[The Lord Bishop of Manchester]

To ask His Majesty’s Government what assessment they have made of the impact of the Household Support Fund on children’s bed poverty.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Viscount Younger of Leckie) (Con)]

My Lords, an evaluation of the current household support fund scheme is under way to better understand the impact of the funding. In the Spring Budget, the Chancellor announced an extension to the household support fund in England for a further six months, meaning that the Government will ensure that targeted support is available for those facing the most challenging financial circumstances as inflation falls. Subject to local decisions, this funding may be used to purchase beds and other household essentials for those in need.

[The Lord Bishop of Manchester]

I thank the Minister for that Answer, and indeed for the fact that the Government extended the household support fund for another six months. But this morning the Government’s latest statistics on child poverty have been published: 4.3 million children are now growing up in poverty. That is an increase of 100,000 since figures were last published, equivalent to the population of a town the size of Eastbourne. With the household support fund due to end again in September, will the Government use these next six months to carefully consider a longer-term strategy than funding settlements for local crisis support, which is a lifeline for children and their families?

--- Later in debate ---

[Viscount Younger of Leckie (Con)]

The Government have kept the household support fund under review, as with all such schemes. Given the changing circumstances, including falling inflation, it was important to consider this in the round as part of the Spring Budget. The right reverend Prelate will know that this is now the fifth household support fund scheme and, following their experience of previous schemes, we know that local authorities and their partners are well placed to deliver support to those in need in particular areas.

[Baroness Ritchie of Downpatrick (Lab)]

My Lords, the Work and Pensions Select Committee in the other place has just published a report into benefit levels, clearly carried out on the basis of the evidence submitted, which showed that claimants are often not able to afford daily living costs and extra costs associated with having a health condition or disability. In view of those findings, will the Minister talk with his ministerial colleagues in the DWP and ensure a review of benefits and welfare based on the essential principle of need, which includes the operating of benefits commensurate with that level of need in our wider community, including the household support fund?

[Viscount Younger of Leckie (Con)]

Of course I will take that point back, but the noble Baroness will be aware that much thought and work is going into this area. In terms of targeted support locally, she will know that the Government have delivered a balanced package of funding through the local government finance settlement for this coming year, 2024-25, which makes available up to £64.7 billion for local authorities in England to target in the right place. I reassure her that this targets the deprived areas of England, particularly the upper decile of the index of multiple deprivation, and they will receive 18% more per dwelling in available resource than the least deprived areas.

[Lord Young of Cookham (Con)]

My Lords, I very much welcome the Government’s decision to extend the household support fund for a further six months, but further to the right reverend Prelate’s supplementary question, I ask: what steps can my noble friend take to ensure a smooth transition, particularly for families with children, when the scheme comes to an end on 30 September—which may be a sensitive time in the political calendar?

[Viscount Younger of Leckie (Con)]

I am well aware of the sensitivities if decisions are made for that particular time. We will have to wait and see. But as inflation falls, as in the good news yesterday with the fall to 3.4%, and with evidence of some price falls and, as the Prime Minister said yesterday, some evidence of some green shoots, notably with energy prices coming down as well, the Government will want to take careful stock over the next few months. Of course, any decision on the future of the household support fund after 30 September will be a matter for the Chancellor when he deems the timing to be right.

[Lord Palmer of Childs Hill (LD)]

My Lords, it is vital that the household support fund continues, but the sad reality of children’s bed poverty is that it stems from systemic problems with our benefit system, which keeps people in deep poverty. Does the Minister agree that the most efficient and effective means of reducing child poverty is to lift the two-child limit? It is not just the right thing to do to end hardship now but the best route in which to end the cycle of poverty for future generations.

[Viscount Younger of Leckie (Con)]

We are very alert to the issue of child poverty. Tackling child poverty is incredibly important, and we have set out a clear and sustainable approach based on evidence of the important role that parental employment plays in reducing the risk of child poverty. But it is more than that. The Question focuses on bed poverty, and it is good to mention that the household support fund can be used to ameliorate bed poverty. There are some examples that the noble Lord may know of, particularly in Bolton and Oldham.

[Baroness D'Souza (CB)]

Despite the many different kinds of benefits that the Government provide, the evidence suggests that deep poverty remains stubbornly high, at 7% of the population. Does not this suggest that what is needed is a public health approach, whereby there is a co-ordinated strategy by central, national and local government, including business, civic society and communities to develop multi-year schemes to address the damaging social consequences of such poverty?

[Viscount Younger of Leckie (Con)]

The noble Baroness makes a very good point of tackling poverty not over one year but over several years. She will know that we will spend £276 billion through the welfare system in the coming year, 2024-25, including around £125 billion on people of working age and children. This is very much work in progress. Bearing in mind the point behind her question, I can say that my department, the DWP, is working ever more closely with the DHSC and other necessary departments to take a range of initiatives forward.

[Baroness Thornton (Lab)]

I cannot resist making the point that the last Labour Government actually lifted hundreds of thousands of children out of poverty. It is welcome that the Government, with less than a month to go, have renewed the household support fund temporarily. The last time that noble Lords discussed this issue at Oral Questions, I asked the Minister how the Government would work on long-term strategies to fight poverty rather than short-term measures renewed only at the last minute. My question remains very much the same: given that two-thirds of children growing up in poverty live in a household where one adult works, are the Government going to work to create long-term stability and security for families, including those experiencing in-work poverty?

[Viscount Younger of Leckie (Con)]

Again, the noble Baroness has made a good point about looking beyond a year and taking a long-term view. More than 26 million awards of support were made between October 2021 and March 2023 across the first of the household support fund schemes. I reassure her that the largest category of spend has been on food support, including support during school holidays, targeted particularly at children who receive free school meals in term time. The focus on children is incredibly important and should be continued.

[Baroness Buscombe (Con)]

My Lords, I pay tribute to my noble friend and his department for all they are doing in terms of a long-term strategy. Given that we are about to pay out something like £290 billion in that one department this year, which is entirely unsustainable if the Government are to support defence, our health service and everything else as well, surely the best way in which to take people out of poverty is to help them into work. That is something that the department is focused on. The opposite party for years has preferred to keep people trapped in poverty. Am I not right that he is doing the right thing?

[Viscount Younger of Leckie (Con)]

My noble friend is absolutely right. The House will know—and I shall say this again—that this is one of the ways forward. The most important thing is for people to be in work. She will know, for example, that we have brought the figure down for workless households very substantially since 2009-10.

[Lord Bird (CB)]

With eight different government departments dealing with poverty, is not it time that we actually co-ordinated our dismantling of poverty by bringing in a government department that deals exclusively with poverty prevention?

[Viscount Younger of Leckie (Con)]

I am very aware of the noble Lord’s interest in this area. I recall the debate that he led on about three weeks ago, which I was involved in. I have very much taken note of his view. We do not agree that there needs to be such a high level of focus on poverty. Having said all that, I think that he is aware of the huge number of initiatives that we are taking, particularly cross-government, in tackling poverty, particularly child poverty.

Housing Benefit: Temporary Accommodation

Viscount Younger of Leckie Excerpts

Wednesday 28th February 2024 Lords Chamber

[Baroness Thornhill (LD)]

I beg leave to ask the Question standing in my name on the Order Paper and declare my interest as a vice-president of the Local Government Association.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Viscount Younger of Leckie) (Con)]

My Lords, the Government recognise the challenges that local authorities face in responding to the increased demand for temporary housing. Our priority is to support claimants and keep people in their homes. From April, we are investing £1.2 billion to increase the local housing allowance, benefiting 1.6 million claimants and helping to prevent homelessness. In England, our £1.2 billion investment in the local authority housing fund provides capital funding directly to councils to build new homes. Additionally, our £2 billion investment over three years tackles homelessness and rough sleeping.

[Baroness Thornhill (LD)]

I thank the noble Viscount for his Answer. What my Question was really getting at was whether there has been an assessment of the adequacy of what is being allocated. Is it enough and is it going to the right places? Stark evidence from the Local Government Association, London Councils and the District Councils’ Network would say that clearly it is not. A survey by the DCN, which was published just today, shows that housing benefit subsidy covers just 38% of district councils’ temporary accommodation costs. Can the Minister explain why the housing benefit subsidy for families and councils using temporary accommodation has been frozen since 2011, despite rising costs and dwindling supply? Does he agree that much has changed in that time, and it is time that the rate changed too?

[Viscount Younger of Leckie (Con)]

The subject that the noble Baroness has raised is to do with temporary housing, and we appreciate that these remain difficult times and that local authorities are subject to many pressures. We will continue to review the situation with housing benefit subsidy rates, but perhaps I can help the noble Baroness by saying that, following the Autumn Statement back in 2023, the Government announced additional funding of £120 million to help councils address in particular the Ukraine situation and homelessness pressures looking ahead to 2024-25. Today, I am pleased to say that it has been announced that England’s share of the £120 million is £109 million, which is to be paid via the homelessness prevention grant top-up for the year 2024-25.

[Baroness Warwick of Undercliffe (Lab)]

My Lords, the undersupply of social housing has meant that spending on temporary accommodation has increased by a staggering 62% over the last five years. Yesterday, Shelter and the National Housing Federation published new research by the CEBR on the economic impact of building social housing. It showed the massive economic and social benefits of building 90,000 new social rented homes and found that delivering social housing at this scale would save nearly £250 million a year on the benefits budget, result in £4.5 billion in housing benefit savings and save local authorities £245 million a year on homelessness services. What action can the Government take to urgently improve delivery of social housing and reverse this vicious cycle?

[Viscount Younger of Leckie (Con)]

The noble Baroness is right that building more houses and finding more houses, including social housing but also in the private rented sector and for homeowners, is incredibly important. We remain committed to our target of delivering 300,000 homes a year in England. We also recognise that the planning system can be complex. The levelling up White Paper marked an important moment, making clear the scale of our ambition to address the inequalities for communities right across the country, which I think was the gist of the noble Baroness’s question.

[Baroness Eaton (Con)]

My Lords, I also declare my interest as a vice-president of the Local Government Association. Research by the Local Government Association confirms that government could save £780 in housing benefit for every social home that is built. Will my noble friend the Minister explore the option of making the 100% retention of right-to-buy receipts permanent, so that local authorities have the fiscal powers necessary to build the next generation of social housing?

[Viscount Younger of Leckie (Con)]

Indeed, and my noble friend has much experience in this field from her long experience in local government. I will certainly take that back: I cannot give any guarantees right now at the Dispatch Box.

[The Archbishop of York]

My Lords, I thank the Minister for his commitment to trying to make headway on this issue. We are all aware of the terrible strains that local authorities are under because of temporary accommodation being necessary and, of course, we also know that the reason is that incomes are just not meeting housing needs. Have the Government assessed the recent proposal from the Joseph Rowntree Foundation and the Trussell Trust for what they call an essentials guarantee? This would guarantee that universal credit was enough to cover the essentials—rent—which would therefore reduce the number of households in temporary accommodation, creating a virtuous cycle that would reduce the budget strain on local councils.

[Viscount Younger of Leckie (Con)]

Yes, I am very aware of the “essentials” argument that often comes up in this Chamber. I do not have any answer for the most reverend Primate except to say that we note the questions that are put on that point. I shall go a little further, because he started by mentioning housing pressures. The £1.2 billion local housing fund enables councils in England to obtain better-quality temporary accommodation for those owed a homelessness duty. That is our way of making sure that there is some progress on homes.

[Baroness Sherlock (Lab)]

My Lords, unaccountably, I am not a vice-president of the Local Government Association—no one has asked me to become one, but who knows?

A number of issues come into play here, but, basically, councils are probably going to spend heading for £2 billion on temporary accommodation this year. They have to pay up front to procure the accommodation, and then they can get back some but not all of it—and increasingly not all of it—from central government. The reality is that they are paying the price for the fact that we do not have a functioning housing system, and the Government, despite being in power for quite a long time, have an ambition but, so far, seem not to have the will to solve that problem. I am guessing that the Minister and the DWP are going to DLUHC Ministers and saying, “What are you going to do to solve this problem?” What answer are they getting?

[Viscount Younger of Leckie (Con)]

We have already taken some actions, and the noble Baroness will know that on 24 January this year the Government announced additional measures for local authorities in England worth £600 million. This includes £500 million of new funding for councils with responsibility for adult and children’s social care, distributed through the social care grant. Taking into account this new funding, local government in England will see an increase in core spending power of up to £4.5 billion next year.

[Lord Bellingham (Con)]

My Lords, is the Minister aware that if you look at any high street in the country, you will see many empty flats above shops, particularly above national multiples? Is he aware that, in Norfolk, Freebridge housing association has done an absolutely sterling job in leasing such flats and then renting them out as temporary accommodation, and to permanent tenants as well? Can he tell the House what more can be done to make the most of this underused resource?

[Viscount Younger of Leckie (Con)]

Absolutely. Although I do not have a particular answer to the noble Lord’s question, I have certainly been reading about some innovative programmes to reinvigorate properties and give them different uses, not only in high streets but in more central areas. This is just the sort of creative thinking that is required to produce more housing, which of course then leads to people moving out of poverty.

[Baroness Pinnock (LD)]

My Lords, I have relevant interests in this issue. Does the noble Lord agree that it is not just the excessive cost of temporary accommodation that we should be thinking about but the huge disruption to family life and children’s education when they have to move into temporary housing? At the heart of it is the huge loss of social housing; in my own council, there are 20,000 fewer houses for social rent than there were 20 years ago. The Government’s proposals will not address this huge issue. When are they going to up their game to provide the social housing that is desperately needed?

[Viscount Younger of Leckie (Con)]

Again, I can say that quite a lot of action is going on this field. The noble Baroness started off by talking about families, and we know that children—who have been a theme of today’s questions—can be affected by living in temporary housing, particularly poor-quality housing. The £1.2 billion local authority housing fund enables councils in England to obtain better-quality temporary accommodation for those owed a duty to be found a home. We want children in particular to grow in a safe and secure home and are committed to a strong welfare system to support those most in need.

UNICEF: Child Poverty Rankings

Viscount Younger of Leckie Excerpts

Wednesday 28th February 2024 Lords Chamber

[Lord Rooker]

To ask His Majesty’s Government what assessment they have made of the position of the United Kingdom set out in the UNICEF’s Innocenti Report Card 18 Child Poverty in the Midst of Wealth.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Viscount Younger of Leckie) (Con)]

My Lords, parental employment plays an important role in reducing the risk of child poverty, and there are 680,000 fewer children growing up in workless households compared with 2010. In 2023-24, we expect to spend around £124 billion through the welfare system on people of working age and children. With over 900,000 vacancies UK-wide, our focus is on supporting parents into, and to progress in, work, including through increasing the national living wage to £11.44 from April.

[Lord Rooker (Lab)]

My Lords, the actual Answer to my Question should be “With shame”. Can the Minister explain why child poverty rate changes in the seven years from 2014 to 2021, adjusted for Covid, on page 27 of the UNICEF report card published two months ago, showed that in two-thirds of the rich nations child poverty rates went down, whereas in four of the worst five nations they were up by 10%? Worst of all, rated 39 out of 39, was the UK, where the poverty rate was up by 20%. Is it not time for an election?

[Viscount Younger of Leckie (Con)]

The Government like to read all reports and regard this one with a great deal of interest. However, our argument is that it is hard to give these findings much weight, due to the methodology used to create this ranking. Let me explain. International comparisons of poverty rates are difficult, due to differences in the frequency and timing of data collection and the approach taken to gather this data.

I shall go further. UNICEF’s ranking uses two measures: recent rates of relative child poverty and the percentage change in those rates over an arbitrary comparison period. There are issues with both measures. First, in considering recent child poverty rates, the latest OECD data shows that the UK has a relative poverty rate for nought to 17 year-olds comparable to large European countries. Secondly, UNICEF’s ranking compares relative poverty rates between 2012-14 and 2019-21.

[Baroness Lister of Burtersett (Lab)]

My Lords, paid work is hardly the answer, as the Minister suggested, given that the majority of children in poverty are in families with a parent in paid work. He goes on about the methodology, but he knows very well the evidence of hardship and deepening poverty in this country. Is it not time the Government accepted the case made by UNICEF and many others for a coherent, cross-government child poverty strategy?

[Viscount Younger of Leckie (Con)]

The noble Baroness will have heard me say this before, but we believe that the best route out of poverty is through work. We are committed to a sustainable long-term approach to tackling child poverty in particular—the subject of this Question—and supporting people on lower incomes to progress in work. She will know that in April 2023, we uprated benefit rates by 10.1%, and working-age benefits will rise by 6.7% from April 2024, in line with inflation. But we are very aware of the pressures that quite a few households are experiencing.

[Lord Palmer of Childs Hill (LD)]

My Lords, the figures are truly devastating and very worrying. Can the Minister tell the House whether the Government have related those child poverty figures to the mental health of young people, as referred to in a report that came out a few days ago? Is there a relationship—and what are the Government doing about it?

[Viscount Younger of Leckie (Con)]

I have given the Government’s view on this scorecard—and, by the way, it is a scorecard, not a report, we should be careful to say. But the noble Lord makes a good point. What I can say is that we are looking at a new type of measure: the Department for Work and Pensions is developing the below average resources statistics to provide a new additional measure of poverty, based on the approach proposed by the Social Metrics Commission, led by my noble friend Lady Stroud.

The noble Lord makes a very good point about children. It is very important to get the statistics accurate. The importance of children remains very much live in our minds.

[Lord Alton of Liverpool (CB)]

My Lords, in addition to combating the financial disadvantage facing some 69 million children in the 43 wealthiest countries in the world, as identified in the UNICEF report referred to by the noble Lord, Lord Rooker, does the Minister agree that poverty can be about more than simply money? How do the Government measure the impact on the life chances of 2 million British children who have minimal contact with their fathers—69% of whom are in the low- income categories—in the households in which they live?

[Viscount Younger of Leckie (Con)]

Again, the noble Lord raises an important point about children, who are the subject of this Question. The latest statistics show that, between 2020-21 and 2021-22, the number of people on absolute low income was virtually unchanged, and absolute poverty rates after housing costs were stable for children and working-age adults, with strong earnings growth offsetting the impact of the withdrawal of the unprecedented levels of government support, protecting those in jobs, which were provided during the pandemic.

[Baroness Sherlock (Lab)]

My Lords, the Minister mentions various measures, but when it comes to international comparisons, the Government do not get to mark their own homework. Relative poverty is used because it is used internationally to measure poverty over time and across countries. The Minister may not like the way it was measured in other countries, but the UNICEF report card compares the UK’s performance in 2019-21 with its performance in 2012-14, and during that time, on those measures, child poverty in the UK clearly increased by 20%. During the same period, in Poland it fell by 38%, in Slovenia by 31% and in Canada by 23%. Does the Minister not accept that something is going badly wrong here?

[Viscount Younger of Leckie (Con)]

I come back to the point that it is important to have statistics that are grounded. The noble Baroness will know that, over many years, we have used our own statistics for poverty, which are cross-government. The Government prefer to look at absolute poverty, as the noble Baroness knows, rather than relative poverty, as the latter can provide counterintuitive results. The absolute poverty line is fixed in real terms, so it will only ever worsen if people are getting poorer and will only ever improve if people are getting richer.

[Baroness Altmann (Con)]

My Lords, I know that my noble friend, who is an excellent Minister, is very concerned about this issue. I apologise for questioning him further, but it remains a struggle for unpaid carers of working age, who perhaps have children as well, to stay in or find work. What more can the Government do to support this important group?

--- Later in debate ---

[Viscount Younger of Leckie (Con)]

The Government certainly recognise and value the vital contribution made by carers every day in providing significant care and continuity of support to family and friends, including children, pensioners and those with disabilities. We know that most carers of working age want to retain a foothold in the labour market, not just for their financial well-being but to enhance their own lives and the lives of those for whom they care. Perhaps I can reassure my noble friend that the Government continue to provide financial support to unpaid carers through the carer’s allowance, the carer element of universal credit and other well-known benefits.

[Baroness Hussein-Ece (LD)]

My Lords, the Minister has said several times that the best way to help children in poverty is for their families to be in work. According to the Child Poverty Action Group, however, 71% of the children it classifies as poor live in working families. Why does he think that such a high percentage of children in poverty live in working families?

[Viscount Younger of Leckie (Con)]

We certainly know that it is prevalent, but I have already laid out the measures we have taken. There has obviously been quite a debate this afternoon about the statistics. The Government published The Best Start for Life: A Vision for the 1,001 Critical Days in March 2021. I reassure the noble Baroness that we recognise that the early start for children is incredibly important. There is a range of initiatives to help with that issue, which of course is linked to poverty.

[Lord Bird (CB)]

Are the Government aware that most of the people we are talking about—the children—inherit poverty? It crosses the generations. When will we move a lot of the effort into breaking poverty passing from one generation to another? That is where the money really needs to be spent, to bring about social transformation in every sense.

[Viscount Younger of Leckie (Con)]

The noble Lord is of course right, and I was very pleased to wind up his debate last week. Perhaps I can be helpful by saying that, compared with 2010, there are over 1 million fewer workless households in the UK, the number of children growing up in homes where no one works has fallen by 680,000, and 1.8 million more children are living in a home where at least one person works. However, the point he makes is incredibly important: we have to stop this intergenerational worklessness issue.

Social Security Benefits Up-rating Order 2024

Viscount Younger of Leckie Excerpts

Tuesday 27th February 2024 Grand Committee

Moved by

[Viscount Younger of Leckie]

That the Grand Committee do consider the Social Security Benefits Up-rating Order 2024.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Viscount Younger of Leckie) (Con)]

My Lords, in my opinion, the provisions in the instrument are compatible with the European Convention on Human Rights. The Social Security Benefits Up-rating Order increases relevant state pension rates by 8.5%, in line with the growth in average earnings in the year to May-July 2023. It will also increase most other benefit rates by 6.7%, in line with the rise in the consumer prices index in the year to September 2023.

The order commits the Government to increased expenditure of £19 billion in 2024-25. It ensures that state benefits maintain their value relative to the increase in the cost of goods and services. It means that most state pensions will gain value relative to that increase. Indeed, the proposed increase to state pensions would be the second highest on record—second only to the increase last April.

This will meet the Government’s commitment to the triple lock, benefiting pensioners who are already in receipt of basic and new state pensions, and younger people who are building up future entitlements as a foundation for private saving. It will raise the level of the safety net in pension credit beyond the increase in prices, and it will maintain the purchasing power of benefits to help with additional costs arising from disability.

For those receiving support linked to participation in the labour market, the Government announced a range of employment and conditionality measures at the Autumn Statement. These measures maintain and improve work incentives. This allows us now to strike a balance in support of those who are in low-paid work, who are looking for work or who are unable to work by linking the increase in the rates of universal credit to the increase in prices.

I will now address state pensions in more detail. The Government’s commitment to the triple lock means that the basic and full rate of the new state pension are uprated by the highest of the growth in average earnings, the growth in prices or 2.5%. This will be 8.5% for 2024-25, in line with the conventional average earnings growth measure. As a result, from April 2024, the basic state pension will increase from £156.20 to £169.50 a week, and the full rate of the new state pension will increase from £203.85 to £221.20 a week. All additional elements of the state pension will rise by 6.7%.

The Government are committed to supporting pensioners on the lowest incomes. The order therefore also increases the safety net provided by the pension credit standard minimum guarantee by 8.5% from April 2024. For single pensioners, this means it will increase from £201.05 to £218.15 a week, and for couples it will increase from £306.85 to £332.95 a week.

I turn now to universal credit, jobseeker’s allowance and employment and support allowance. The Social Security Administration Act 1992 gives the Secretary of State discretion on whether to increase the rates of benefits such as these, which are linked to participation in the labour market. Given the employment and conditionality measures I mentioned earlier, he has decided to strike a balance in support by also increasing the rates of these benefits by 6.7%, in line with the increase in the consumer prices index.

As a further measure to reinforce work incentives, the monthly amounts of universal credit work allowances will also go up by 6.7% from April 2024. They will increase from £379 to £404 a month for those also receiving support for housing costs, and from £631 to £673 a month for those not receiving support for housing costs. Noble Lords are aware that these are the amounts a household can earn before their universal credit payment is affected if they have children or if they have limited capability for work. The 6.7% increase will also apply to statutory payments, such as statutory maternity pay, statutory paternity pay and statutory sick pay.

I turn finally to benefits for those with additional disability needs and those who provide unpaid care for them. The rates of personal independence payment, disability living allowance and attendance allowance will increase by 6.7% from April 2024, in line with the increase in the cost of goods and services. As we have debated previously in other contexts, the Government recognise the vital role played by unpaid carers. This order also increases the rate of carer’s allowance by 6.7%, from £76.75 to £81.90. Unpaid carers may also access support through universal credit, pension credit and housing benefit. All these include additional amounts for carers, which will also increase by 6.7%. For a single person, the carer element in universal credit will increase from £185.86 to £198.31 a month. The additional amount for carers in pension credit and the carer premium in the other income-related benefits will increase from £42.75 to £45.60 a week.

In conclusion, the draft Social Security Benefits Up-rating Order 2024 implements the Government’s commitment to the triple lock. It provides for a real-terms increase in the value of the safety net in pension credit, it maintains the purchasing power of benefits for additional disability needs and for people providing unpaid care to people with those needs, and it strikes a balance in universal credit by maintaining both work incentives and the purchasing power of benefit income. I commend this instrument to the Committee.

[Baroness Lister of Burtersett (Lab)]

My Lords, I of course welcome the inflation-proofing of benefits and the temporary lifting of the local housing allowance freeze in April, but—I fear this speech is a series of “but”s—I find it, frankly, insulting to those affected. I should say that the Minister is not included in this but, from the Prime Minister down, the uprating is constantly lauded by Ministers as a record amount, an additional support, as if it represents a great act of generosity which somehow justifies the lack of action on a number of other fronts. The inflation-proofing of benefits should be the default position, avoiding the months of speculation, fuelled by government sources, that have caused considerable uncertainty and anxiety for benefit recipients in and out of work.

Moreover, there is a number of reasons why the increase in line with inflation is far from generous. The Resolution Foundation points out that the uprating will do no more than restore benefits to their real value on the eve of the pandemic. While there were flaws in the cost of living payments, which we discussed last year, their loss now means that many households on universal credit will be worse off in cash terms. The foundation estimates that the typical household in the poorest quarter of the working-age population could face an income fall of 2% next year. The following year, on current assumptions, private renters will face a further freeze in the local housing allowance, which, according to Citizens Advice, is an important factor in the increase in the number facing a negative budget—that is, where income does not cover essential spending.

There is also the prospect that the uprating could coincide with the abolition of the household support fund, which has acted as both a lifeline and a sticking plaster for the holes in the social security safety net. I know that the Minister can say nothing more than that this is kept under review, but local authorities, charities and potential beneficiaries need a bit of certainty, rather than to wait for the Budget, which is only a month before the outcome of this review takes effect. I really do not understand how he can tell me in a Written Answer that the Government do not have robust data on the number of English local authorities that have closed their local welfare assistance schemes which, in his answer to my earlier Oral Question, he prayed in aid, should the household support fund be scrapped. Surely, such data should inform any review of the future of the fund. As it is, we know from End Furniture Poverty that at least 37 authorities have closed their scheme.

--- Later in debate ---

[Baroness Sherlock (Lab)]

My Lords, I thank the Minister for introducing this order and all noble Lords who have spoken. As he has explained, the Social Security Benefits Up-rating Order will increase most working-age benefits in line with CPI. We too welcome this instrument, because of course we want to see social security keep pace with prices, particularly at a time of spiking inflation and economic instability. That used to be the norm among both Labour and Conservative Governments, of course, but the past decade has seen a marked change.

There were of course the years of shame between 2013 and 2020, when most working-age benefits and tax credits were either frozen or uprated by small amounts, such as just 1%. Although today we are back to uprating mostly by CPI and occasionally by earnings, as my noble friend Lady Lister said, once again that uprating has been preceded by a period of speculation, which is deeply unhelpful. I can assume only that this is driven from somewhere inside the Government, because it happens too regularly. The speculation suggests that maybe this year the uprating will not be by the full amount or maybe will not happen at all.

As my noble friend mentioned, that speculation causes real stress and worry for people who depend on benefits and tax credits to survive. I begin to wonder: is it a strategy to allow Ministers the option of either freezing benefits or not uprating them fully so that, if they then finally do the right thing, people are supposed to be suitably grateful? As my noble friend Lady Lister pointed out, it is good that benefits are being uprated, but it is not an act of unusual generosity; it is simply a decision not to cut the value of benefits during a cost of living crisis.

This instrument, as we have heard, also increases the state pension by earnings in line with the triple lock. I accept the distinction that my noble friend Lord Davies helpfully made. The rates of basic and new state pensions will rise by 8.5%, as will the standard minimum guarantee in pension credit and the higher rate of widows’ and widowers’ pensions in industrial death benefit. However, this does not apply to a number of the others. I will be interested in the Minister’s response to that. In particular, can he explain the position on the deferred state pension? If someone chooses to defer their state pension and the pattern is that the deferred amount is uprated by CPI rather than the triple lock, are they made aware of that? When people make a decision about deferral, do they understand the consequences?

I had some other questions on pensions and pensioners but I was entirely thrown by the decision to separate these two instruments this year. Most years, we do them together in a single block, so I wrote a wonderful speech waxing lyrical and weaving in pensioners and old age, but now here I am. I shall come back, if the Minister will indulge me, to a couple of more general questions on pensioners when we come to debate the next instrument.

The context for this year’s uprating, as my noble friend Lady Lister expounded in some detail—aided ably by the noble Baroness, Lady Janke—is absolutely brutal. I will not repeat the extensive critique that my noble friend made or her unpacking of the economic climate in which so many families are living, but it is brutal. The basic fact is that there are now more than 4 million children living in poverty. There are 400,000 more children living in poverty now than when Labour left office in 2010.

One of the things that bothers me about this is that, whenever somebody raises this, the Minister—I know it is in his brief—will at some point in the response use the line that the Government believe that work is the best route out of poverty. Yet, clearly, the facts speak for themselves: more than two-thirds of children who live in poverty have parents in work. Something in that picture does not work. It is something that all of us in politics must address.

We in Labour have been looking at what we would do. We have a plan to give people a better life, so that they are able to make ends meet and have a good start for their children. We are looking at making sure that there is a breakfast club in every primary school and at giving people access to cheaper energy and an insulated home. We will reform universal credit, jobcentres and employment support so that people can get a better job with better pay. We will also have a child poverty strategy. Can the Minister tell the Committee in his response what the Government’s strategy is? What is their plan to do that? Other than simply declaring that work is the best route out of poverty, what is the Government’s plan to deal with the challenge of child poverty today? I look forward to the Minister’s response.

[Viscount Younger of Leckie (Con)]

My Lords, I thank all those who have spoken in this short debate. Before I attend to the number of questions asked and subjects raised, I would like to say at the outset—I normally do this but, today, I give special feeling and meaning to it—that this Government really do fully recognise the challenges facing people across the country due to the higher cost of living.

Although inflation is trending in the right direction, with the Bank of England now forecasting a fall to a target rate of around 2% in three months’ time, I acknowledge that pressures on household budgets very much persist. I saw this for myself in a recent visit to the Earlsfield Foodbank. The Government are not complacent about such matters; I hope noble Lords will recognise that the Government have taken action on a number of fronts to address these concerns, which were raised by a number of Peers—four, to be precise—this afternoon. I may not be able to answer all the questions but I will do my very best.

Let me start at the outset—I do not think I have done this before—by saying that, although I acknowledge the remarks made by the noble Baroness, Lady Lister, I am generally disappointed that every single item was a negative. I am disappointed that nothing she said seemed to support what we have done in these regulations or what we are trying to do. We really are trying. There was a long litany of faults coming from the Government: that the uprating was not enough; on the loss of the cost of living payments; on the freeze in the LHA, which is all for the future as we do not like where we stand on that yet; on the household support fund; and on the benefits cap review, including why it was not being done.

The noble Baroness is right to ask questions but I say gently that there is no mention of the genuine headwinds that all Governments have been facing. This Government have not been alone in the experiences of the pandemic and coming out of it, as well as of the war in Ukraine. There was no indication of these whatever. It is a bit disappointing. I know that the noble Baroness will understand why I have said these things but I thought it would be worth mentioning them.

[Baroness Lister of Burtersett (Lab)]

I am sorry to interrupt but I started by saying that I welcomed the inflation-proofing. That is a positive. I then warned him by saying, “All the ‘buts’ are coming, I am afraid”, but it was in the context of welcoming.

[Viscount Younger of Leckie (Con)]

I appreciate that from the noble Baroness. We have undertaken a number of debates together; I hope that she did not mind me mentioning it.

However, questions are questions; I will start by attempting to answer one of them. After each uprating, household income will go down by 2% because of the ending of the cost of living payments. At the moment, the Government have no plans to extend the cost of living payments past the 2023-24 round of payments. Responding swiftly and decisively to the cost of living pressures has been a key priority for the Government. Over the past two years, the Government have demonstrated their commitment to supporting the most vulnerable by providing one of the largest support packages in Europe. Taken together, support to households to help with the high cost of living is worth £104 billion over the period 2022-23 to 2024-25.

As was mentioned earlier, reducing inflation and growing the economy are the most effective ways to build a more prosperous future for all. This Government are committed to halving the rate of inflation; they have pretty well achieved that. However, to be helpful to the noble Baroness, an evaluation of the cost of living payments is under way. This seeks to understand their effectiveness as a means of support for low-income and vulnerable households. This will be made public when it is ready.

The noble Baroness mentioned the household support fund. She probably second-guessed my answer, which is that this is kept under review in the usual way. It has been used to support millions of households in need with the cost of essentials. For example, 26 million awards were made to households in need between 1 October 2021 and 31 March 2023. More than £2 billion in funding has been provided to local authorities via the household support fund since it began—that is, October 2021. More than 10 million awards were made between 1 October 2022 and 31 March 2023.

The noble Baroness, Lady Lister, asked why we are not going to increase the benefit cap. She cited the fact that the Secretary of State has an obligation to review at least once every five years. We believe that there has to be a balance. The benefit cap provides a balanced work incentive and fairness for hard-working taxpaying households, while providing a safety net of support for the most vulnerable. She will know that the Government increased the level significantly from April 2023 following the review in November 2022. The proportion of all working-age households capped remains low, at 1.3%, and these capped households will still be able to receive benefits up to the value of gross earnings of around £26,500, or £31,300 in London. For single households, this is around £15,800, or £19,000 in London.

The noble Baroness, Lady Lister, asked about benefits levels and how to measure them. There is no objective way of deciding what an adequate level of benefit should be as every person has different requirements depending on their circumstances. However, we will spend £276 billion through the welfare system in Great Britain this financial year, including around £124 billion on people of working age and their children. Over the past two years, the Government have demonstrated their commitment to supporting the most vulnerable by providing one of the largest support packages in Europe, which I mentioned earlier.

The national living wage, which I also want to mention, is set to increase this April by 9.8% to £11.44, on top of the increase in April 2023 of 9.7%. This represents an increase of over £1,800 in the annual earnings of a full-time worker on the national living wage, and it is expected to benefit over 2.7 million low- paid workers.

Guaranteed Minimum Pensions Increase Order 2024

Viscount Younger of Leckie Excerpts

Tuesday 27th February 2024 Grand Committee

Moved by

[Viscount Younger of Leckie]

That the Grand Committee do consider the Guaranteed Minimum Pensions Increase Order 2024.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Viscount Younger of Leckie) (Con)]

My Lords, this order was laid before the House on 15 January. It is a routine and quite technical annual order and is usually debated alongside the Social Security Benefits Up-rating Order 2024, which we have just finished discussing. Unusually, this year, we are running the orders one after the other, as determined by the Whips’ Office. I hope the Committee will agree that this order is not considered too controversial.

The order sets out the annual amount by which the guaranteed minimum pension—the so-called GMP, which is part of an individual’s contracted-out occupational pension earned between April 1988 and April 1997—must be increased. This year, occupational pension schemes that provide GMPs are required to increase GMPs earned during that period which are in payment by 3%.

I start by giving a bit of background on GMPs. They were created to help employees save income for their retirement but in an affordable way. The state pension used to be made up of two parts: the flat-rate basic state pension and the earnings-related additional state pension. The flat-rate basic state pension was funded through national insurance and paid at the full rate to those with sufficient qualifying years of national insurance contributions, or pro rata for those with a partial record.

The second part of the state pension, the additional state pension, was linked to a person’s earnings. The higher earnings-related national insurance contributions applied to both the employee and the employer and built entitlement to an additional state pension, based on the employee’s earnings. The intention was to ensure that as many people as possible were able to save towards an earnings-related work-based pension that would supplement their basic state pension in retirement.

The additional state pension was introduced in 1978. At the time, many employers were already offering their employees a workplace occupational pension through their own scheme. Therefore, having both an earnings-related additional state pension and a company occupational pension was seen as dual provision. It was overly complicated and potentially unaffordable for employers and employees.

The then Government therefore decided to deal with this through the system of contracting out and the associated provision of guaranteed minimum pensions. Between April 1978 and April 1997, employers sponsoring salary-related schemes could contract their employees out of the additional state pension through membership of the company pension scheme, as long as that pension scheme paid its members a guaranteed minimum pension as part of their occupational pension from the scheme.

The idea was that, rather than paying additional national insurance to the state, people would instead build up a similar amount of occupational pension through their workplace pension schemes. This was the guaranteed minimum pension. It was broadly equivalent to the additional state pension foregone, and it set a level below which the occupational pension could not fall. In return, both the scheme members and the sponsoring employer of the scheme paid lower national insurance contributions. Most schemes provided pensions above this set minimum, with many providing pensions that were significantly higher. The pensions provided above the GMP have their own rules; however, the GMP provides a useful minimum benefit for members. I think that covers the relevant background to the order, which may be familiar to the Committee, and I hope this gives a sense of what was happening at the time and why the order is still important.

Moving on to the order itself, the GMPs increase order relates specifically to members who were contracted out of the additional state pension between April 1988 and April 1997. The order provides these members with a measure of inflation protection for the GMP element of an occupational pension scheme built up between 1988 and 1997.

As your Lordships may be aware, legislation states that when there has been an increase in the annual level of prices, as measured at the previous September, the order must raise the GMP element of an individual’s occupational pension that was earned between 1988 and 1997 by this percentage increase or 3%, whichever is lower. As September 2023’s consumer prices index figure was 6.7%, this means that the increase for the financial year 2024-25 will be 3%. The cap of 3% for GMPs earned between those years aims to achieve a balance between providing some measure of protection against inflation, while not increasing schemes’ costs beyond what they can generally afford.

The cap provides schemes with more certainty, allowing them better to forecast their future liabilities, which is important when they are considering their funding requirements. If there were no limit on the increases, the higher costs could put unreasonable pressure on schemes, which could put their future viability at risk. The cumulative effect of high increases every year could be significant.

A point that has been raised previously, including in the debate last year, is the suggestion that requiring schemes to index post-1988 GMPs was introduced only to save the taxpayer money, as the indexation on earlier accruals was achieved through an uplift in the state pension. A central reason behind why the Government made this decision is that contracting out has always been about the state and the private sector working together, and that having a set amount of indexation paid for by the scheme, with additional protection provided by the state, is a sensible balance.

Let me explain how that system works. When inflation is above 3%, as it currently is, most people with GMPs earned between those years—1988 and 1997—who reached state pension age before 2016 will receive the same inflation protection as if they had not been contracted out. This means that most people who reached state pension age before April 2016 will receive a top-up of 3.7% this year through the additional state pension. In other words, they will receive 3% from their occupational pension scheme and the remainder as a top-up through the additional state pension.

--- Later in debate ---

[Viscount Younger of Leckie (Con)]

My Lords, I begin by thanking the three Peers who have spoken in this debate which was even than the previous one. I say at the outset that I appreciate the general support for these regulations. Regarding the GMP increase order, it is always helpful to be aware from the outset that your Lordships are generally supportive of what it sets out to do. Occupational pensions schemes help provide members of their scheme who have a GMP accrued between 1988 and 1997 with, as I said earlier, a measure of protection against inflation eroding the value of their pension.

At the outset, I will also give a very brief response to what was not really a question from the noble Baroness, Lady Janke, about the triple lock. We are pleased to confirm that the triple lock remains in place. I do not think that there was a question there, but I acknowledge that point.

There were a number of questions. I shall start off by answering in no particular order some questions raised by the noble Lord, Lord Davies of Brixton. As to the very specific question of how many people who contracted out will be worse off because of the loss of GMP indexation through the state scheme—he particularly mentioned 2016-17—people who reach state pension age after April 2016 will be entitled to the new state pension and will receive up to 3% from the scheme on their 1988-1997 GMP, which he will know. When looking at the reforms in the round, people may not lose out in aggregate terms because, in effect, indexation has ended for people reaching state pension age from 6 April 2016. This is because the transitional rules of the new state pension can be particularly advantageous for people who have been contracted out.

--- Later in debate ---

[Baroness Sherlock (Lab)]

I just want to understand that response. It does not sound like very many. I presume what the Minister is trying to say to the Committee is that, having looked at the denominator of how many people might expect to be eligible and how much they might get, that number does not feel disproportionate. Is that what he is saying?

[Viscount Younger of Leckie (Con)]

Yes—that is absolutely right. Let me see whether there is any further information that I can get to the noble Baroness on this niche matter. If I am wrong, I will write, but I will certainly write anyway. I am coming towards the end of my remarks; I have only a couple more questions to answer.

The noble Baroness, Lady Sherlock, asked where she might find the latest state pension statistics. As she may know, they are available on Stat-Xplore, but only up to May 2023. The release of updated statistics due to be published on Tuesday 13 February 2024 was suspended, as the noble Baroness alluded to in her remarks. This delay results from issues with the internal processing of state pension data after it was sent for analysis from the “Get your State Pension” system and has an impact only on statistics that are not yet published. State pension statistics previously published on Stat-Xplore in November 2023 remain reliable. Work is under way to remediate these issues, and we will publish the suspended state pension statistics as soon as we are able.

The noble Baroness also asked about the status of the auto-enrolment extension Act’s powers and the consultation. The Government remain committed to expanding the benefits of AE to younger people and helping all workers to save more for their retirement. This is why we supported the Pensions (Extension of Automatic Enrolment) Act 2023, to which the noble Baroness alluded. To cut to the quick, we intend to conduct a consultation on the detailed implementation of these measures at the right time and in the right way. That is probably not in line with what my colleague in the other place said—“in due course”—but our commitment stands to implement in the mid-2020s.

With those remarks, I will, as ever, check in Hansard that I have attempted to answer all the questions asked. The Committee should be reassured that, if I have not done so, I will write. In the meantime, I thank all three Peers for their interest.

Motion agreed.

Poverty Reduction

Viscount Younger of Leckie Excerpts

Thursday 22nd February 2024 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Viscount Younger of Leckie) (Con)]

My Lords, I am very pleased to close this important debate. It has allowed us to discuss many issues and challenges relating to poverty, with a focus on cross-government efforts to find a solution.

I will start by thanking all noble Lords for their valuable contributions today—particularly the noble Lord, Lord Bird, who has tirelessly championed vulnerable and homeless people over many years, for initiating this debate. I will say a little more because noble Lords should be in no doubt that I was very moved by his impassioned speech. He spoke about giving the poor more, mentioning it many times, and how this was not necessarily the way forward. He also spoke with great conviction about PECC—prevention, emergency, coping and cure. I listened carefully to his remarks. I am afraid that I may use the word “initiative” in some of my remarks, and I await the spears that will be thrown at me without, I have to say, any particular shield.

I also pay tribute to the noble Baroness, Lady Taylor, for her long service in local government. It is appropriate to acknowledge the time she spent in local government. She now gives us the benefit of her knowledge and skills in this House, and we are all the better for that.

I have listened with great interest to many ideas promulgated today, particularly about a co-ordinated approach to tackling poverty. I would like to reassure noble Lords, in particular the noble Baroness, Lady Lister, that we indeed have a co-ordinated approach. I will set out our stall in terms of what the Government have been doing. The noble Baroness, Lady Burt, is right; we need to work together. That is extremely important.

I also acknowledge the outstanding maiden speech from the right reverend Prelate the Bishop of Hereford. I am glad, as has been said by others, that he has survived so far, given the past experiences—some rather gruesome—of his predecessors. It is especially helpful and important to have a representative from his Benches for rural issues, which is not to say that there are not other right reverend Prelates who cover rural issues. He has clearly made it his business to become steeped in many local issues in Hereford, and that bodes well, because I can tell that his style is to focus on detail, with cogent argument. The House is all the better for his presence here, and I await his further contributions—with some trepidation, if I happen to be at the Dispatch Box.

I fully recognise that poverty is a hugely complex subject and that many people who experience it often face a range of barriers that can make it difficult for them to move on with their lives. As the noble Lord, Lord Bird, acknowledged, it is incredibly difficult. I also recognise that tackling these complex underlying challenges cannot be done in isolation. This Government have a range of programmes that work across departmental boundaries to help people to address the challenges they face, so that they can take their first steps towards employment and better outcomes for themselves and their families.

The noble Baroness, Lady Lister, is right that it is also about dignity and promoting and upholding the dignity of those who are suffering in poverty and destitution, without patronisation, if I can put it in that way.

I want at this point to acknowledge the valedictory speech of my friend, the right reverend Prelate the Bishop of Durham. We all wish him well for his retirement, and I personally thank him for his commitment and for raising many important issues during his time in the House. I have to say that I have appreciated his frankness in speaking truth to power—as the noble Baroness, Lady Armstrong, said, not about him but in other respects—and for his friendship. As many Peers have mentioned, the right reverend Prelate has consistently raised important matters relating to poverty, and this debate is certainly no different. I will be addressing many of the points he has raised, including raising the national living wage, reappraising of the value of unpaid work, the two-child limit, which is an old favourite that I shall be covering, the essentials guarantee, too much silo thinking and the need for a shift in national thinking, which was a big comment that he made. We will miss him and, if I may say so, he leaves certain important matters, including questions, ringing in my ears, and I will not forget that.

I shall set out some specific examples in a moment, but I want to start by reminding noble Lords of the significant support provided by my department to those on the lowest incomes. Before I get into detail on that, coming back to some questions that have been raised by the noble Baroness, Lady Lister, in terms of a poverty strategy, while there is no written strategy, we have been clear in our approach, which I will outline throughout my speech, and I hope that she will acknowledge this, focusing on both our welfare offer and our efforts to get people into sustainable employment and progress. There is more than that. She will expect these lines to be “trotted out”, as she put it, but I hope she does not think that way too much.

The noble Baroness asked an important question about poverty measurement. She might like to know that my department is developing so-called below average resources—BAR—statistics to provide a new, additional measure of poverty based on the approach proposed by the Social Metrics Commission, led by my noble friend Lady Stroud. The new BAR approach seeks to provide a more expansive view of available resources, both savings and inescapable costs, than the income measurement adopted under the DWP’s households below average income statistics. In developing this additional poverty measure, the DWP is working closely with stakeholders, including the SMC, other government departments and subject matter experts on this important point.

A strong welfare system is at the heart of ensuring support for those who need it, and our commitment to maintaining a strong safety net is reflected in the £276 billion that we expect to spend through the welfare system in Great Britain this financial year. Having uprated in line with inflation this financial year, we have announced a further increase of 6.7% in working age benefits for 2024-25, subject to parliamentary approval. The basic and new state pensions will be uprated by 8.5%, in line with earnings, as part of the ongoing triple lock.

We are also providing cost of living support worth £104 billion over the period 2022-23 to 2024-25. This is a cross-cutting package of support built on what we learned during the Covid-19 pandemic about supporting those most in need during challenging times. In particular, my department has worked closely with HMRC, HM Treasury and the devolved Administrations to deliver cost of living payments of up to £900 to more than 8 million households across the UK on eligible, means-tested benefits this financial year. I am pleased to say that DWP and HMRC delivered the third means-tested cost of living payment of £299 to most eligible households between 6 February and 22 February 2024.

We have not been delivering this support alone. My department has worked closely with local government—to be helpful to the noble Baroness, Lady Taylor, and perhaps also to the noble Baroness, Lady Lane-Fox—to deliver the household support fund. One hundred and fifty-three local authorities across England have used this funding to provide a variety of support to households to help with their essential costs. I am aware that there remains considerable interest across both Houses in the future of this fund. As with any issue, the Government continue to keep these matters under review in the usual way. As the House knows only too well, the current scheme continues to run until the end of March.

From April, we are increasing the national living wage for people aged 21 and over by 9.8% to £11.44, representing an increase of more than £1,800 to the gross annual earnings of a full-time worker on the national living wage. The right reverend Prelate the Bishop of Durham asked about low pay, particularly with regard to insecure work. I have already mentioned the national living wage, but this record cash increase of £1.20 per hour means we will hit the target for the national living wage to equal two-thirds of median earnings for those aged 21 and over in 2024. This will bring an end to the low hourly rate for this particular cohort. The new in-work progression offer is now live across all jobcentres in Great Britain and we estimate that 1.2 million low-paid claimants are eligible for work coach support to help them to increase their earnings. Progression leads are working with key partners, including local government employers and skills providers, to identify and develop local progression opportunities.

The right reverend Prelate the Bishop of Hereford raised the importance of housing. As he will know, the Government are supporting people in paying their rent and will invest £1.2 billion on increasing the local housing allowance rate to the 30th percentile of local market rents. That will ensure that 1.6 million private renters in receipt of housing benefit or universal credit gain on average around £800 per year in additional help towards their rental costs in 2024-25. I believe that is a significant investment, worth about £7 billion over five years.

I said earlier that we do not work in isolation, and many of the complex issues faced by vulnerable people cannot be tackled through the welfare system alone. My department continues to work in partnership with other parts of central and local government to deliver the support that people need. Alongside the Department for Levelling Up, Housing and Communities, we are committed to working with local authorities to tackle homelessness and end rough sleeping for good—which we must do, to reassure the noble Lord, Lord Bird, who is so steeped in this subject. I am proud of the progress that has been made in recent years and the continued work to meet all the commitments outlined in the cross-government rough sleeping strategy but, as I will be told by the noble Lord, there is much more to do, and I can see it myself when walking through the streets.

I turn to the important theme that was raised today of families and children. The Department for Work and Pensions, the Department for Levelling Up, Housing and Communities and the Department for Education are working together to deliver the Supporting Families programme. Between April 2015 and December 2023, the programme funded local authorities to help more than 612,000 families make sustained improvements in relation to the often complex problems that led to them joining the programme in the first place. A network of 300 specialised work coaches, the Supporting Families employment advisers, support the programme by providing employment support for families that are experiencing multiple disadvantages.

The departments also work together to deliver a range of support to help ensure that children thrive, which is another key theme that has come up today. The pupil premium will ensure that targeted funding continues to help schools to support disadvantaged five to 16 year-old pupils and to close attainment caps.

The noble Baroness, Lady Lister, raised the importance of child poverty in an important part of her speech. I hope I can reassure her that we are taking this seriously and working across government on a range of matters to reduce child poverty. She shakes her head, so I clearly have more work to do.

The right reverend Prelate the Bishop of Durham also raised the importance of child poverty and talked about the two-child policy. He asked again why the Government do not do the right thing and abolish it. We believe that families on benefits should face the same financial choices when deciding to grow their family as those supporting themselves solely through work. He will know only too well, and he has heard these lines from me before, that on 9 July the Supreme Court handed down the judicial review judgment on the two-child policy. The court found the policy lawful and not in breach of the European Convention on Human Rights. However, no doubt we will continue to debate this matter.

In addition, there is collaboration between the Department of Health and Social Care and the Department for Education to provide support to families through Healthy Start, the nursery milk scheme and the school fruit and vegetables scheme, which together help more than 3 million children. To reassure the noble Baroness, Lady D’Souza, the Government have extended the free school meals eligibility several times, as she will probably know, and to more groups of children than any other Government over the past half a century.

The issue of child poverty was raised also by the noble Baroness, Lady Armstrong, and the right reverend Prelate the Bishop of Durham, focusing on poverty in the north-east and with particular reference to the North East Child Poverty Commission, and I listened carefully to what she said. There are some figures that I could bring out, but the most recent data shows that the proportion of children in the north-east in absolute poverty after housing costs fell by seven percentage points in the three years to 2021-22, compared with the three years up to 2009-10. Having said all that, we understand that many families are still struggling—I am the first to say that—and this is work in progress. That is why some help has been given through the comprehensive cost of living support.

The noble Baronesses, Lady Burt and Lady Armstrong, addressed the pupil premium. I emphasise, in response to the comments from the noble Baroness, Lady Burt, that the funding is on top of the £1 billion of recovery premium funding provided in the 2022-23 and 2023-24 academic years, following over £300 million delivered in 2021-22.

On our approach to poverty, while it is absolutely right that we maintain a strong welfare safety net for those in need—I emphasise that—particularly during challenging economic times, we have always believed that, for those who can, the best way to help people to improve their financial circumstances is through work. I know that the noble Lord, Lord Bird, and I alluded to this earlier, mentioned prevention and cure. That is an answer, but not the only answer. We believe that prevention and cure are possible through getting people into work and I hope he will agree with that, although, as I say, it may not provide all the answers.

Our approach is based on the clear evidence around the important role that work, especially full-time work, can play in lifting people out of poverty. This is why, with over 900,000 vacancies across the UK, our focus is firmly on helping people take their first steps into work and to progress towards financial independence. We want everyone who can to be able to find a job and to progress and thrive in work, whoever they are and wherever they live. To ensure that support meets the needs of people across the country, my department offers a national programme of welfare and employment support, delivered through the Jobcentre Plus network across Great Britain.

My department also has local teams that specialise in working in partnership with local government and other local stakeholders, including businesses and communities—to be helpful to the noble Baroness, Lady Lane-Fox—to understand each area’s needs. This place-based approach is crucial in helping to address the disparities that exist between regions and underlines our commitment to spreading opportunity and unleashing potential across the UK.

Of course, we recognise the points raised by the noble Baroness, Lady Finlay, on the link between health and work. That includes mental health conditions, which she particularly focused on. The joint DWP/DHSC Work and Health Unit was set up in 2015 in recognition of the significant link between work and health and to reflect the shared agenda of boosting employment opportunities for disabled people and people with health conditions.

I want to cover some of the questions raised; I hope I can cover them in the remaining time. Notably, these questions were from the noble Lords, Lord Bird and Lord Loomba, and the noble Baroness, Lady Lister. This goes back to strategy. I think the noble Lord, Lord Bird, was probably asking the Government for a ministry of poverty, not a Ministry of Justice. I may be wrong in interpreting what he was trying to say. I hope I have shown in my speech that we saw during the pandemic the Department for Work and Pensions consistently working well across government to support the most vulnerable households.

There is a lot of work going on across government and I believe that there is joined-up thinking. In addition to Ministers meeting counterparts in other departments, officials work regularly with colleagues across government to better understand the multidimensional nature of poverty and to craft effective policy. This includes a cross-government senior officials’ group on poverty, as well as bilateral meetings and meetings with external anti-poverty stakeholders.

The noble Baroness, Lady D’Souza, asked about the five-week wait. It is not possible to award a universal credit payment as soon as a claim is made, as the assessment period must run its course before the award of UC can be calculated. This process ensures that claimants are paid their correct entitlement, based on verified information and actual earnings, and prevents significant overpayments from occurring.

The noble Baroness, Lady Lane-Fox, made an important point about digital exclusion particularly affecting lower-income households. I reassure her that we are aware of this. She is right and she is a great champion in this area. The costs of being connected online can be a barrier for low-income households. The DWP has worked with DCMS and Ofcom to influence broadband providers to support extending eligibility for new broadband social tariffs to low-income households. As a result, some broadband providers have made their new social tariffs available to all UC claimants and claimants of other means-tested benefits. The DWP has worked with Ofcom to promote awareness of these social tariffs to DWP stakeholders and work coaches throughout our Jobcentre Plus network, who can then signpost claimants to apply for broadband social tariffs.

The noble Baroness also raised the issue of chambers of commerce, and I listened carefully to what she said. I think my speech set out, as I said earlier, some emphasis on the close cross-government working with local authorities. I agree that it is vital that local authorities also work collectively to build local leadership, and I will certainly take her remarks back.

The noble Lord, Lord Loomba, and the noble Baroness, Lady Lister, spoke about funding for local government. I reassure them that the Government have announced additional measures for local authorities in England, worth £600 million—the noble Baroness will know that.

The right reverend Prelate the Bishop of Hereford and the noble Baroness, Lady Finlay, spoke about mental health. I alluded to that earlier, but we recognise the challenges of those in poverty, which is why we are investing an additional £2.3 billion a year in mental health services.

I should draw my remarks to a close. There are a couple of questions, particularly from the noble Lord, Lord Desai, who made interesting points about a universal basic income. I will write to the noble Lord on his interesting idea, which is not new to me. I will expand upon it and perhaps give him a full answer.

I reassure the House that Ministers continue to work across and beyond departmental boundaries to ensure that we take a co-ordinated approach to supporting vulnerable and low-income households. We look forward to working with all noble Lords across the House to continue to support those in need. This is a very important subject, and I again thank the noble Lord, Lord Bird, for once again raising it. It certainly is important for the Government.

Pneumoconiosis etc. (Workers’ Compensation) (Payment of Claims) (Amendment) Regulations 2024

Viscount Younger of Leckie Excerpts

Monday 19th February 2024 Grand Committee

Moved by

[Viscount Younger of Leckie]

That the Grand Committee do consider the Pneumoconiosis etc. (Workers’ Compensation) (Payment of Claims) (Amendment) Regulations 2024.

Motion agreed.